Greenville, South Carolina, USA, 27 March 2007 --(BUSINESS WIRE)-- Bowater Incorporated (NYSE:BOW) today announced that it expects first quarter operating income to be USD 15 million to USD 20 million below fourth quarter levels, excluding any gains from asset sales and other nonrecurring items.

In the first quarter, the company has experienced significant recycled fiber cost pressures, with the cost for old newsprint increasing by approximately 35% since December. In light of weak newsprint demand in North America, which has declined by 12% year-to-date compared to 2006, the company has curtailed production of newsprint and specialty papers during the quarter at its Gatineau, Quebec, mill in Canada, and selected other machines that are heavily dependent upon recycled fiber. In addition, lumber demand continues to be weak, with low pricing through the first quarter.

"We are extremely disappointed by our anticipated first quarter financial performance," said David J. Paterson, chairman, president and chief executive officer. "While North American newsprint demand and lumber pricing continues to be weak, we will remain strictly focused on containing controllable costs and matching our production to demand. That said, our pulp business is performing well with strong pricing across all grades."

Bowater Incorporated, headquartered in Greenville, South Carolina, is a leading producer of coated and specialty papers and newsprint. In addition, the company sells bleached market pulp and lumber products. Bowater employs approximately 7400 people and has 12 pulp and paper mills in the United States, Canada, and South Korea. In North America, it also operates one converting facility and eight sawmills. Bowater's operations are supported by approximately 815,700 acres of timberlands owned or leased in the United States and Canada and 28 million acres of timber cutting rights in Canada. Bowater operates six recycling plants and is one of the world's largest consumers of recycled newspapers and magazines. Bowater common stock is listed on the New York Stock Exchange. A special class of stock exchangeable into Bowater common stock is listed on the Toronto Stock Exchange (TSX: BWX). To learn more, visit www.bowater.com.

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